Pharmaceutical Benefit Manager, Term Paper Example

As a pharmaceutical benefit manager, there are several pricing strategies that could be used to charge employers for prescription drugs. These include taking advantage of pricing by using methods such as wholesale acquisition cost (WAC), maximum allowable cost (MAC), average wholesale price (AWP). Other techniques that are useful include utilization management, targeted disease intervention, and managed formulary. Briefly, WAC is the cost necessary to establish generic drugs, MAC is the highest amount of money a pharmacy could reasonable charge for a drug, AWP is the average prices paid to the warehouse for a drug product on a daily or weekly basis, utilization management reduces the total amount of unnecessary prescriptions filled per year, targeted disease intervention ensures that preventative measures are taken to ensure protection against illness, and managed formulary allows the quick assembly of a drug that is not prepackaged.

The strategy that I would personally recommend to charge employers for prescription drugs includes a combination of several of the principles described above. Currently, many insurance companies are requiring that their patients subscribe to virtual pharmacies in order to save both the customer and the insurance company money. These companies, such as Express Scripts, allow the patient to fill an initial prescription in the pharmacy, but if it is a refillable product, this must be done through their online service and be refilled in bulk. Specifically, Express Scripts requires three of each prescription to be filled at a time. Delivery is free to the customer, and the insurance company saves money because prescriptions are filled without major interference of a third party. This mail-in or virtual prescription service applies to the principles of WAC, MAC, AWP, utilization management, and managed formulary.

This principle applies to WAC because it focuses on the need of the wholesale cost to determine the prices that are reasonable to sell individuals. While the mail-in or virtual pharmacy programs ensure that the pharmacy product is given to the client for less money than one would expect in a regular situation, it’s essential to understand that the pharmacy must still profit. As a consequence, this value controls the amount of money that the company is able to charge for every three prescriptions issues. Average wholesale price comes into play for a similar purpose. A second factor that is important to consider in this scenario is off-setting the cost of shipping to the individual’s household. As a consequence, they must initiate the maximum allowable cost in a manner that allows them to remain competitive with in-store pharmacies. Utilization management becomes apparent when examining how the mail-in pharmacy determines whether refill prescriptions should be renewed. When a client fills their initial prescription in the in-store pharmacy, the insurance company will provide information about the medication and the name of the doctor to the mail-in pharmacy. As a consequence, when there is a need to refill a prescription, this information will be already available in the virtual pharmacy’s database and allow the customer to request a refill with the click of a button. The virtual pharmacy will then take charge of contacting the prescriber to determine whether a refill should be issued or otherwise. Occasionally, the practitioner will require that the customer revisit their office before a final decision could be made. Lastly, this strategy optimizes managed formulary because there are many professionals who work at the main site for the mail-in and virtual pharmacy, so they know the best ways to formulate a drug to ensure that it is affordable and profitable.

As mentioned above, mail-in pharmacies appear to be more feasible than their in-store counterparts due to the potential for savings that exist. However, it is necessary to determine whether the service is deemed effective. It is essential to consider that many of these mail-in companies rush ship their client’s desired medications in appropriate conditions, such as a cooled environment for temperature sensitive products. A 1997 study entitled “A Comparison of Satisfaction with Mail versus Traditional Pharmacy Services” found that clients who subscribe to mail pharmacies are more satisfied than those who fill their prescriptions in in-store pharmacies (Johnson et al., 1997). Although mail-in pharmacies are at a disadvantages when a prescription needs to urgently be filled, mail-in pharmacies prevent the need to leave the home when ordering a new prescription and lower costs are an excellent incentive to make the switch. A related study entitled “Mail-Order Pharmacy Use and Adherence to Diabetes-Related Medications” found that patients were more likely to adhere to their diabetes medications when using the mail-order pharmacy program due to reminders issued by the pharmacy itself and the ability to refill in bulk rather than individually (Duru et al, 2010). An additional factor that aided this phenomenon was the ease in which prescriptions could be refilled.

It is likely that because mail-in pharmacies have been a great success thus far, many other insurance companies will begin to require subscription to its services as a part of standard care. Ultimately, they benefit both the client and the company due to increased savings and efficacy of service, and there is little evidence that contradicts the need for this switch.

References

Duru OK, Schmittdiel JA, Karter AJ. (2010). Mail-Order Pharmacy Use and Adherence to Diabetes-Related Medications. Am J Manag Care, 16(1): 33-40.

Express Scripts. (n.d.). Welcome. Retrieved from http://www.express-scripts.com/

Johnson JA, Coons SJ, Hays RD, Sabers D, Jones P, Langley PC. (1997). A Comparison of Satisfaction with Mail versus Traditional Pharmacy Services. Comparative Research. Retrieved from http://www.amcp.org/JMCP/1997/May/May_PDFs/5855/1033.html

Jones, J.D. (2003). Developing an effective generic prescription drug program. Benefits Quarterly, 19(1): 14-18. Retrieved from ProQuest.